The Assembly could gain the power to vary income tax following a referendum.

Share

Get daily updates directly to your inbox

Thank you for subscribing!

Could not subscribe, try again laterInvalid Email

LABOUR would not support the use of income tax-varying powers to undercut other regions of the UK, Shadow Welsh Secretary Owen Smith said this afternoon as legislation to trigger a new wave of Welsh devolution completed its Commons scrutiny.

Mr Smith’s party is backing the Wales Bill in order to secure new borrowing powers for the Welsh Government but he raised concerns today about the potential consequences of varying income tax if the Assembly gains the ability to do so following a referendum.

Stressing that he remains “sceptical” about income tax powers, he said: “[There] are very real concerns – these are not frivolous concerns – about the constituents we represent and the benefit that would be afforded to them by Wales having powers that could be misused in our view, in particular by a Conservative party, to cut taxes in Wales in order to engender tax competition across the UK, which we see bringing many risks.”

Conservative Welsh Secretary and Clwyd West MP David Jones pushed him to clarify the Labour stance, saying: “Will the Labour party in the Assembly be pushing for an early referendum on tax-varying powers?”

Mr Smith said: “[I] think the answer is no,” adding that “the first minister has said that income tax-varying powers for Wales are not a priority”.

Montgomeryshire Conservative Glyn Davies said the “whole rhetoric of the Opposition benches is as if they are actually against the devolution of financial accountability to Wales.”

Plaid Cymru Carmarthen East & Dinefwr MP Jonathan Edwards said that “enabling the Welsh Government with tax-raising powers would incentivise the Welsh Government to improve the Welsh economy [because] at the moment it’s a spending body.”

He added: “[There] are 22 local authorities in Wales all with fiscal powers to change council tax rates and non-domestic rates and the Labour party doesn’t seem to think that’s a problem within Wales in terms of tax competition.”

Former Welsh Secretary Peter Hain condemned provisions in the Wales Bill to scrap the Labour-introduced ban on candidates in Assembly elections standing both in a constituency and on a regional list, warning this would lead to an “abuse of democracy in Wales”.

He said: “I trust the Government will be proud of bringing politicians in Wales into even greater disrepute than the political class right across the United Kingdom is now held.

However, Welsh Secretary Mr Jones said the ban on so-called on dual-candidacy was “clearly unfair” and said that both electoral experts and the public considered it “partisan and anomalous”. Defending the legislation, he said: “[This] Bill marks a significant strengthening of the Welsh devolution settlement.”

Former Welsh Secretary Paul Murphy said: “I think that by strengthening devolution you actually strengthen the kingdom as a United Kingdom.”

Shadow Wales Office minister Nia Griffith said it was a “missed opportunity” for the Wales Bill not to contain provisions which would give the nation a similar devolution settlement to Scotland under which its parliament is free to legislate in any area that has not been “reserved” by Westminster.

She said: “We are committed to a reserved powers model and that is what we would like to see progress on.”

Ceredigion MP Mark Williams said it was a “Liberal Democrat achievement” for the Bill to have got so far on its legislative journey.